There are many reasons that you would consider to refinance your mortgage. The most common is a rate in term refinance where you are trying to lower the monthly payment of your mortgage, by reducing your interest rate. You can also refinance to consolidate debt, pay off a car, take out money for you child’s education, or to take that dream vacation that you have always wanted. If you fit into any of these categories then here is what you need to know to refinance your mortgage.
Getting Your Info
Once you have talked with one of the experienced loan consultants regarding your mortgage refinance it is necessary for company to collect some information from you to continue the process. Collection of this information makes it better suited to find the best program to fit your financial needs. This information will give a better understanding of your current financial position so mortgage company can package it up and send it to one of the lenders. Some examples of information that must be collected is: current bank statement, two consecutive current pay stubs, most recent W-2 or 1040, valid ID (which can be a drivers license, visa, resident alien card, social security card, state issued ID card, or a passport), and your current mortgage statement. This paperwork along with some questions will be asked of you.
Locking Your Loan
This is the time during your mortgage refinance when mortgage company locks your rate with the appropriate lender. Since interest rates fluctuate daily an educated client must be aware that until their rate is locked it is not definite. The interest rate is determined through collaboration between you (the client) and your loan consultant. It is also determined by the programs that the lender is offering and the pricing they are offering for that day. Once the time is right, you lock your loan.
Completing mortgage refinance
After you lock the loan it is time to complete your mortgage refinance. By the time that your loan is locked mortgage company will have the conditional approval from the lender. This means that any left over conditions will have to be submitted to the lender before you can move to final approval. Once mortgage company have satisfied all the conditions it is time to order the documents (“docs”) for your mortgage refinance.
After docs are ordered in a couple days you will get a call from escrow that you need to sign the docs. These docs basically outline the guidelines of your loan and once signed the docs are almost finalized.
Closing the Loan
The signed docs are then sent back to the lender and they are examined to see that they were signed correctly. Then the lender puts together the package and sees what documentation they are missing. These are the items that they need to fund your loan so they must be in as soon as possible. With any refinance it is necessary that you wait three days after you sign in order to fund the loan. This is your three day right of recession, once this is up you are able to fund this loan. When the lender is ready to fund they cooperate with escrow, and the next day your loan will record. If your loan is a cashout refinance you will be contacted in the next couple days to come and pick up your check.
Once your mortgage refinance is complete do not hesitate to call and ask mortgage company any questions that may arise. In the next month you will be seeing a new mortgage statement. If you so not receive this statement or there is something wrong with your statement please notify your mortgage company as soon as possible. This can be a problem if you do not take care of it right away. But in most cases this is not a factor and you can simply sit back and enjoy your lower payment when your next statement comes.